The politician and his banker - How to efficiently grant state aid

• 成果类型: Article
• 署名作者: Hainz, Christa; Hakenes, Hendrik
• 署名单位: University of Bonn; Max Planck Society; Leibniz Association; Ifo Institut; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2011.09.005
• 发表日期: 2012
• 页码: 218-225
• 关键词: State aid; Subsidized banks; Public banks; governance

摘要

Politicians should spend money as efficiently as possible. But what is the best method of granting state aid to firms? We use a theoretical model with firms that differ in their success probabilities and compare different types of direct subsidies with indirect subsidies through bank loans. We find that, for a large range of parameters, subsidies through banks entail higher social welfare than direct subsidies, avoiding windfall gains to entrepreneurs and economizing on screening costs. For selfish politicians, subsidizing a bank has the additional advantage that part of the screening costs are born by private banks. Consequently, from a welfare perspective, politicians use subsidized banks inefficiently often. (C) 2011 Elsevier B.V. All rights reserved.